Latest Consumer Intelligence data shows that car insurance is rising at the same rate as the price of Heinz beans, council run car parking for diesel cars in Bath, or many other consumer goods. The worrying aspect of this particular dataset is that fitting a telematics device to your car doesn’t seem to make much difference. If the industry cannot assess risk on personal driving data, rather than 20th century stuff like postcodes, engine size, occupation, age etc. then we are in trouble. Individual driver data should now be in the primary factor on quotes, not assumptions on location, job or age.
Here’s the word;
The average quoted price of car insurance rose by 61% in the year to August– the highest annual increase on record, the latest Consumer Intelligence Car Insurance Price Index shows. Average quoted car insurance premiums have also seen a record 22% rise in the three months from May to August – the biggest quarterly increase for the index, since tracking began in October 2013.
Telematics providers are becoming less competitive accounting for just 17% of the top five quotes compared with 21% just three months ago.
That has particularly hit younger drivers and telematics providers now account for just 41% of the most competitive quotes for under-25s compared with 53% three months ago. Under-25s are seeing rises in quoted premiums of 66.7%.
“Motorists of all ages have seen new business quotes soar over the last year and many will likely be feeling the pinch in their household budgets against a backdrop of other rising costs of living,” says Max Thompson, Insurance Insight Manager at Consumer Intelligence. “Competition from telematics has reduced for a second consecutive quarter. This drop-back in telematics delivering competitive quotes has likely triggered the sharper increases in competitive premiums seen this quarter, as telematics quotes are usually significantly cheaper than traditional quotes,” adds Thompson.
Long-term view
Average overall quoted premiums have more than doubled by 102.9% since October 2013 when Consumer Intelligence first started collecting data. Quoted premiums are at their highest levels since Consumer Intelligence records began with 66.2% of the increase happening since December 2022.
Age differences in the past year
The over-50s have seen the smallest increases in quoted premiums in the past 12 months at 56.3% compared with 61% for those aged 25 to 49 and 66.7% for the under-25s.
Telematics
The proportion of competitive price comparison website quotes provided by telematics providers for young driver has fallen to a six-year low comparable with February 2017.
The fall in competitiveness for telematics is partly explained by changes implemented by leading providers. Hasting Direct YouDrive which was a market leader at the start of the year and particularly in the 20 to 24-year-old market has increased premiums while QuoteMeHappy Connect which only quoted ages 17 to 29 withdrew from the market towards the end of July.
Regional differences
Average quoted premiums have risen the most for drivers in London, the West Midlands and the South East with increases of 69.5%, 64.4% and 64.2% respectively. Drivers in the North West are experiencing the lowest rises in quoted premiums but even they face rises of 55%.
IE COMMENT – UNINSURED DRIVERS ARE THE ELEPHANT IN THE ROOM
One thing that nobody seems able to mention in the industry is the rise of uninsured driving. By that we also mean delivery and business use without the corrct cover, fronting, wedding car hire, temporary policies cancelled after 7 days once a car is recovered from a pound and so on. People see the system of compulsory vehicle insurance as a game, not the right thing to do.
The general lawlessness which is visible to everyone in our streets means millions of people are driving with no documents; licences, MoT, VED tax, insurance – they are increasingly seen as optional by a significant minority of the UK population. That means the costs of covering accidents and damage to property by the uninsured drivers is being passed onto the law abiding majority. Let’s not pussyfoot around here, every policyholder WITH the correct cover is picking up the tab for the blurred out stars of endless TV traffic cop shows.
Just check your social media feeds for comments on what people think about insurers. Words like racket, scam, legalised robbery, and worse, are routinely used. People can see some uninsured cars being seized and sold at auctions, but the root problem isn’t going away. The industry needs to campaign against IPT, against uninsured drivers, in a much more forceful way, and explain that this is costing everyone huge amounts of money. Posting huge year-on-year profits while premiums rise isn’t helping either, so an industry wide fund to help victims of uninsured drivers get compensated quickly, and at much higher levels than the measly crumbs offered by the Criminal Injuries Compensation Board, would be a wise move.
This policy of making the good pay for the bad, isn’t sustainable in the long term.
Unless insurance brands can genuinely reward those who play by the rules, don’t have collisions and drive reasonably well, then the entire house of cards will collapse. We have the tech to overlay data from multiple sources to profile drivers – and riders – and sift the problem road users from the generally law abiding. As an industry we need to stop asking the question “have you been involved in an accident?”
Instead, it needs to be; “have you been found blameworthy or liable in any accident in the last 5 years?”
That’s what really counts, surely? Identifying the risk takers, the law breakers, or those who regard insurance as being simply a game to be played. In the end, insurance is a social contract, it asks the many to pay for the losses of the few. But in divide and rule Britain that contract is on thin ice.
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